Wynn: Analysts Say Keep Putting Quarters in the Machine

By Avi Salzman

Wynn Resorts (WYNN) fell 5.4% in midday trading on Tuesday following the release of a disappointing first quarter earnings report late on Monday. The company’s revenue in Las Vegas fell 8%, and its operating margin dipped by 270 basis points to 19.8%.

But analysts cautioned investors against dumping the stock now.

For one thing, the company’s results in Macau were “better than it looks,” wrote Nomura analyst Harry Curtis.

“Given strong forward trends in Macau and Vegas, there is no significant change in our core business outlook,” Curtis wrote.

The Street has been touting the company’s upcoming project in Cotai (a section of Macau) as a catalyst. And although the company gave few new updates on the development in its earnings call, analysts see the project as a major catalyst for the stock, even though it won;t likely open for at least three years. Credit Suisse analyst Joel Simkins sees the beginning of construction as a catalyst.

“Assuming WYNN breaks ground in the next 90 days, the project would likely open in 2016. We continue to believe that WYNN is well-positioned given its premium brand, strong balance sheet, significant free cash flow, and visible growth pipeline. We expect WYNN will continue to target additional growth opportunities, including further expansion in Asia long-term.”

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